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Greetings, Court Fans!

While we await the Court’s issuance of more decisions on Wednesday, we have four recaps of cases decided in the last week or so:

• Moore v. United States (No. 22-800), in which a 7-2 Court held that a one-time repatriation tax was not an unconstitutional “direct” tax.
• Diaz v. United States (No. 23-14), which held (this time 6-3) that an expert’s opinion that “most people” transporting illegal drugs are aware of what they’re transporting is not impermissible testimony about the defendant’s mental state.
• Gonzalez v. Trevino (No. 22-1025), where an 8-1 Court (via a brief unsigned per curiam opinion accompanied by three concurring opinions) concluded that the Fifth Circuit erred in applying an exception to the general rule that an absence of probable cause must be shown to prevail on a retaliatory-arrest claim, which the Court recognized in Nieves v. Bartlett (2019).
• And Campos-Chaves v. Garland (No. 22-674), where a 5-4 Court held that three noncitizens who had been ordered removed in absentia had received property notice of their removal proceedings and therefore could not seek to rescind them.

Moore addressed the constitutionality of the Mandatory Repatriation Tax (MRT), a one-time tax imposed by the 2017 Tax Cuts and Jobs Act. Two taxpayers subject to the tax sued, arguing that it was a “direct tax,” and so was valid only if it was apportioned among the states according to population (which it wasn’t). But in a short and narrow opinion for a seven-justice majority, Justice Kavanaugh concluded that the tax was really just a form of income tax, which need not be apportioned under the Sixteenth Amendment.

The case began in 2017 when Congress passed the MRT. Its goal was to address a long-standing problem with international corporate taxation: Americans were stashing trillions of dollars in American-controlled foreign corporations, which was almost entirely untaxed because the foreign corporations themselves weren’t subject to U.S. taxes and the undistributed income earned from Americans’ investments in those corporations wasn’t being distributed as income, so it wasn’t taxed either. MRT aimed to fix this by attributing the undistributed income of American-controlled foreign corporations to American shareholders, and then taxing those American shareholders according to their pro rata shares of the accumulated income.

Charles and Kathleen Moore were among those whose foreign investments were caught by the MRT. In 2006, they invested in an American-controlled Indian company, KisanKraft, started by one of their friends, receiving a 13-percent ownership share. Over the years, KisanKraft generated a lot of income, but it never distributed that income to its American shareholders, meaning that neither KisanKraft nor the Moores paid U.S. income tax on it. By 2017, the Moore’s pro rata share of KisanKraft’s accumulated income amounted to $508,000. After factoring in some deductions, they declared roughly $130,000 of it under the MRT, subjecting them to $14,729 in taxes.

The Moores paid the tax under protest and then sued for a refund, arguing that the tax was a “direct tax” on their personal property. And while the Constitution authorizes Congress to enact direct taxes, it requires that they be apportioned among the states according to their percentage of U.S. population. That means that if Congress enacted a property tax on real property, the citizens of New York, which has just over 6% of U.S. population, would have to pay just over 6% of the total tax collected. Because that isn’t feasible (administratively or politically), Congress has rarely employed direct taxes, instead using indirect taxes—taxes on activities or transactions—like tariffs and income tax to fund the government. While those taxes must be “uniform throughout the United States,” they do not need to be apportioned between the states. And that understanding was confirmed with the Sixteenth Amendment, which explicitly authorized Congress to collect income taxes from any source without apportionment among the States.

The Moores argued that the MRT was a direct tax, not an indirect tax on income, because income fundamentally requires requires realization, and they never realized any gains from KisanKraft. That meant that MRT was really a tax on their property interests in KisanKraft, which makes it a direct tax that had to be (and wasn’t) proportioned. But the Government disputed that point, arguing that realization was more or less irrelevant to whether the Moores’ accumulated income in KisanKraft was taxable as income. The Ninth Circuit endorsed that broader argument, and the Court granted certiorari.

Writing for a majority of seven, Justice Kavanaugh split the baby, rejecting the Moores’ argument but going really no further than was required to uphold the MRT. In the majority’s view, the basic problem with the Moores’ argument was that Congress can either tax a business entity itself on the income it earns or it can treat the entity as a pass-through, attributing its undistributed income to the shareholders or partners and then taxing those shareholders or partners on that income. Either way, a long line of decisions have upheld similar practices of Congress attributing the income of certain types of corporations to their shareholders and collecting taxes on that income. Because MRT was really no different than these previously upheld taxes in operation, Kavanaugh concluded it was permissible under these precedents. In doing so, however, he explicitly left open several more complicated (and perhaps significant) hypothetical questions, such as whether Congress could “tax both the entity and the shareholders or partners on the entity’s undistributed income.” And he declined to “address the Government’s argument that a gain need not be realized to constitute income under the Constitution.” Thus, while the MRT may be constitutional, the Court’s majority opinion shed little light on the permissibility of other forms of taxes, like the occasionally mooted wealth tax.

Justice Jackson, writing for herself, concurred. She emphasized Congress’s “plenary power” over taxation and stressed that the Sixteenth Amendment allows Congress to tax incomes without apportionment. And she would go much further than the majority in rejecting any strict realization requirement for income taxes, arguing that the term “income” has long been understood flexibly to include both realized and unrealized gains.

Justice Barrett, joined by Justice Alito, concurred in the judgment but not in the Court’s opinion. In her view, it was a much more difficult question than the majority let on whether the Court’s precedents (or the Constitution) allow Congress to attribute the income of closely held corporations to their shareholders and to subject that income to taxation. But she found it unnecessary to definitively resolve that question here because the Moores had conceded the constitutionality of another tax (Subpart F) that similarly attributes (a small portion of) a foreign corporation’s income to its American shareholders and charges them taxes on it. Because she saw no meaningful difference between MRT and Subpart F, the Moores failed to show their entitlement to a refund.

Justice Thomas, joined by Justice Gorsuch, dissented. In their view, the hallmark of an income tax is that it is limited to income realized by the taxpayer. Because the Moores never actually received any of their investment gains, those unrealized gains could not be taxed as income, leaving them only as non-apportioned (and hence invalid) direct taxes on the Moores’ property interest in their company’s shares. And he rejected the majority’s “attribution” analysis as a “new invention” created “by plucking superficially supportive phrases from an eclectic selection of tax cases.” Because those cases did not give Congress the authority to attribute the KisanKraft’s unrealized gains to the Moores, he would find the MRT unconstitutional.

Diaz v. United States (No. 23-14) began when Delilah Diaz was stopped at the U.S.-Mexico border with 54 pounds of methamphetamine in her car. She was charged with importing the meth, which required the Government to prove she “knowingly” transported it. She defended against those charges by asserting what is colloquially known as the “blind mule” defense: She was simply driving her boyfriend’s car and didn’t know he had hidden drugs in it. In response, the Government called Homeland Security Investigations Special Agent Andrew Flood as an expert witness, who testified that most people who are transporting drugs are aware of what they’re carrying because drug traffickers “generally do not entrust large quantities of drugs to people who are unaware they are transporting them.”

Diaz objected to Agent Flood’s testimony under Federal Rule of Evidence 704(b). It provides that in a criminal case, an expert witness “must not state an opinion about whether the defendant did or did not have a mental state or condition that constitutes an element of the crime charged or of a defense.” But the District Court rejected that argument, concluding that while Agent Flood could not testify about the knowledge of all drug couriers or about Diaz’s knowledge specifically, he could testify about what most people in Diaz’s situation knew. After Agent Flood testified in this manner, the jury convicted her, and her conviction was upheld on appeal.

Writing for a majority of six, Justice Thomas affirmed. By its terms, Rule 704(b) only precludes certain opinions about the defendant. And Agent Flood did not express an opinion about whether Diaz herself knowingly transported methamphetamine; he instead only offered opinions about what most couriers would know. The ultimate decision of whether Diaz had the requisite mental state—knowledge—was then left to the jury, which could make that determination considering Agent Flood’s testimony as just one piece of evidence among many. As a result, Agent’s Flood testimony about what most drug couriers would know did not run afoul of Rule 704(b).

Justice Jackson, writing only for herself, concurred to emphasize that Rule 704(b) is party agnostic. That is, neither the Government nor the defense can call an expert to offer an opinion about a defendant’s mental state. Conversely, both the Government and the defense can present generalized expert testimony that informs the jury about relevant facts without dictating its conclusion as to the defendant’s specific mental state. And she pointed out that expert testimony on the likelihood of a mental state based on group behavior helps the jury understand complex situations while preserving their role in determining individual culpability.

Justice Gorsuch, joined by Justices Sotomayor and Kagan, dissented. In their view, there is no real difference between asking an expert witness to offer an opinion about the defendant’s mental state and asking an expert witness to opine about the mental state of people in exactly the same position as the defendant. And it matters little that Agent Flood’s opinion was just a “probabilistic” one about what most people know; Rule 704(b) prohibits offering any opinion about the defendant’s mental state, not just a definitive one. Gorsuch concluded by emphasizing the danger of allowing expert testimony to overshadow the jury’s independent assessment and by warning that “speculative guesswork” about a defendant’s state of mind should not give rise to the “gravest condemnation” of a criminal conviction.

Our third case is Gonzalez v. Trevino (No. 22-1025), a rather odd per curiam decision where the Court concluded that the Fifth Circuit used too narrow an approach to an exception recognized in Nieves v. Bartlett (2019). But it didn’t provide a whole lot of guidance as to what exactly the Fifth Circuit was to do on remand, a topic some justices tried to flesh out in separate concurrences.

Sylvia Gonzalez, a member of the city council of a small Texas town, helped gather signatures for a petition to remove the city manager from their post. During a heated city council meeting, Gonzalez was seen on camera taking the petition from the mayor’s desk and hiding it in her binder. She was charged under a law prohibiting the intentional removal of government documents. But the charges were eventually dropped, and Gonzalez brought a civil suit alleging retaliatory arrest, that is, asserting that she was arrested in retaliation for her First Amendment protected speech.

What does a plaintiff like Gonzalez have to prove to prevail on a retaliatory-arrest claim like this? Well, the Court addressed that in Nieves, holding that such a claim generally fails if it is shown that probable cause existed for the arrest. But we say “generally” because Nieves recognized an exception to this general rule if the plaintiff provides objective evidence that he or she was arrested when otherwise similarly situated individuals not engaging in protected speech had not been detained. To meet that exception, Gonzalez reviewed the last decade of arrest data in her county and showed that essentially no one had ever been charged with violating this criminal statute in remotely similar circumstances. The District Court found that adequate, but the Fifth Circuit disagreed, concluding that Nieves’s exception was satisfied only if a plaintiff could point to someone who had engaged in the exact same criminal conduct but was not arrested.

Before the Supreme Court, Gonzalez asked the Fifth Circuit’s decision to be reversed on two grounds. First, she argued that the Fifth Circuit’s requirement of a specific comparator went too far. And second, she argued that Nieves’s general rule (that a retaliatory-arrest claim fails if it was supported by probable cause) applies only to split-second arrests and not deliberate ones such as occurred here.

In a five-page per curiam opinion, the Court reversed the Fifth Circuit on the first ground and did not reach the second. It did so with just a few sentences of analysis: Gonzalez’s survey is a “permissible type of evidence,” because the fact that no one had ever been arrested for engaging in a certain type of conduct makes it likely that an officer has in fact declined to arrest someone who engaged in conduct like Gonzalez’s. So although the Nieves exception may be “slim,” the Fifth Circuit’s “demand for virtually identical and identifiable comparators goes too far.”

Writing only for himself, Justice Alito concurred to “provide further guidance on the scope” of the Court’s decision. But in many ways, that concurrence reads more like a majority opinion, leading some commentators to speculate that perhaps the majority decision was originally assigned to Alito but his draft opinion was unable to command a majority, leading to its replacement with the much shorter and less conclusive per curiam. Thus, he begins by fleshing out in greater detail the facts of the case, before turning to the history of Nieves, its exception, and its rationale, all as a lead-in to explaining why the Fifth Circuit’s demand for a direct comparator was too restrictive. But at the same time, he noted that negative evidence (namely, that no one had ever been arrested for similar conduct) like Gonzalez’s may not be persuasive, so courts should carefully analyze whether the specific evidence is good enough given the context. Finally, he came to Gonzalez’s second theory, rejecting her narrow view that would limit Nieves only to split-second arrests.

Alito was not the only justice to find the majority per curiam unsatisfying. Justice Kavanaugh, again writing for himself, concurred. He doubted whether this was even appropriately seen as a Nieves exception case at all because Gonzalez’s claim was less about whether her conduct was similar to conduct for which others were not charged and more about whether she had the requisite mens rea. But despite these doubts, he concurred in the per curiam opinion because it did not “seem to say anything that is harmful to the law, even though the per curiam (in my view) does not really have anything to do with Gonzalez’s case.” Justice Jackson, joined by Justice Sotomayor also concurred to note that Gonzalez’s survey was not the only evidence; she also pointed to other types of evidence that may suggest a retaliatory motive and satisfy Nieves. And finally, Justice Thomas dissented, arguing (as he had originally in Nieves) that the Court should not have created Nieves’s exception in the first place, so the conceded existence of probable cause should defeat Gonzalez’s claim entirely.

Finally, in Campos-Chaves v. Garland (No. 22-674), the Court addressed the type of written notice the Government must provide when initiating the removal of a noncitizen from the United States. By a vote of 5-4, the Court concluded that the notice provided in these cases was adequate, precluding the removed persons from seeking to rescind their removal orders after the fact.

Paragraph (1) of 8 U.S.C. §1229(a) obligates the Government to provide a noncitizen facing removal proceedings with “written notice” in the form of a “notice to appear” that sets out, among other things, “the time and place at which the proceedings will be held.” Paragraph (2) of §1229(a) then requires that, “in the case of any change or postponement in the time and place of such proceedings,” the Government provide “a written notice” specifying “the new time or place of the proceedings.” Under §1229a(b)(5)(A), where noncitizens fail to appear at removal proceedings, the Government may obtain absentia orders of removal by establishing removability and provision of “the written notice.” However, under §1229a(b)(5)(C)(ii), noncitizens may obtain rescission of such absentia orders by proving they “did not receive notice in accordance with paragraph (1) or (2) of section 1229(a).”

In three consolidated cases—two from the Ninth Circuit and one from the Fifth Circuit—noncitizens Esmelis Campos-Chaves, Varinder Singh, and Raul Daniel Mendez-Colín each initially received a notice of appear under paragraph (1) that did not specify the time and place of a removal hearing. But the Government later followed up with a notice under paragraph (2) that did specify the time and place. None of the three noncitizens appeared at their hearings, so the Government obtained absentia orders of removal. All three later sought the rescission of these orders, arguing they didn’t receive the required notice. The Fifth Circuit denied the one petition before it, but the Ninth Circuit granted the other two.

In a 5-4 majority opinion authored by Justice Alito and joined by Chief Justice Roberts and Justices Thomas, Kavanaugh, and Barrett, the Court held that the noncitizens could not obtain rescission of the absentia orders of removal because each had received a proper notice under paragraph (2). This decision required the Court to resolve two conflicting interpretations of the word “or” in §1229a(b)(5)(C)(ii). Giving “or” a disjunctive meaning, the majority reasoned that noncitizens must establish they did not receive notice under both (1) and (2), making rescission unavailable as long as either the original notice to appear was valid or the notice of the revised hearing date was. Interpreting §1229a(b)(5)(A)—which refers to “the written notice”—as requiring the Government to provide only a single written notice in advance of removal, the majority declined to adopt an interpretation of §1229a(b)(5)(C)(ii) that would make it “more difficult for the Government to defend an in absentia removal order than it is to obtain one in the first place.” Thus, because Campos-Chaves, Singh, and Mendez-Colín received notice of the time and place of their removal proceedings, they could not challenge their in absentia removal orders, even if the initial notice was defective.

Justice Jackson dissented, joined by Justices Sotomayor, Kagan, and Gorsuch. Jackson read “or” to only require the noncitizen to establish inadequate notice under either §1229(a)(1) or §1229(a)(2); unless the noncitizen received both, rescission is available. She reasoned that this interpretation—requiring the Government to comply fully with both (1) and (2)—would support Congress’s goal of ensuring that a noncitizen facing removal has certain specifically designated information “at the outset.” She observed that no language in the statute contains even a “hint that paragraph (1)’s dictates are optional.” She would not excuse the Government’s admitted “chronic failure” to comply fully with (1).